Question 1

In the 1700s and 1800s:

Accepted Answer

A)   labor laws were passed to protect workers from job-related injuries.
B)   labor laws were passed to prevent child labor.
C)   the invisible hand was free to push wage rates down to subsistence levels.
D)   the invisible hand was prevented from pushing wage rates down to subsistence levels.E) B) and D)
F) A) and B)

Question 2

Entrepreneurship could best be classified as:

Accepted Answer

A)   creative labor.
B)   simple labor.
C)   unskilled labor.
D)   highly specialized labor.E) C) and D)
F) B) and C)

Question 3

If a single union supplies all the labor in a competitive labor market, the union probably will:

Accepted Answer

A)   increase labor supply to raise employment.
B)   restrict labor supply to raise wages.
C)   increase union membership to increase wages.
D)   behave as a monopsonist.E) B) and C)
F) A) and B)

Question 4

The demand for labor is derived from the demand for output.

Accepted Answer

A) True 
 B)False

Question 5

Institutional discrimination exists when:

Accepted Answer

A)   discrimination is based on individual characteristics related to job performance.
B)   discrimination is based on individual characteristics not related to job performance.
C)   the structure of a job makes it difficult for certain groups of individuals to succeed.
D)   discrimination is based on correctly perceived statistical characteristics of a group.E) C) and D)
F) None of the above C

Question 6

The marginal revenue product of an input tends to decrease as:

Accepted Answer

A)   the price of output increases.
B)   more of the input is used.
C)   the price of the input decreases.
D)   productivity increases.E) None of the above
F) A) and B) B

Question 7

Supply and demand analysis can explain:

Accepted Answer

A)   how much rent will accrue to a landholder and the initial set of property rights.
B)   how much rent will accrue to a landholder but not the initial set of property rights.
C)   the initial set of property rights but not how much rent will accrue to a landholder.
D)   neither the initial set of property rights nor how much rent will accrue to a landholder.E) A) and B)
F) B) and C)

Question 8

The elasticity of labor demand does not depend on the:

Accepted Answer

A)   elasticity of demand for the firm's product.
B)   relative importance of the factor in the production process.
C)   possibility of and cost of substitution in production.
D)   elasticity of labor supply.E) A) and B)
F) A) and C)

Question 9

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP)  of labor used to produce apples would:

Accepted Answer

A)   not change.
B)   change in a manner that cannot be determined without additional information.
C)   be cut in half.
D)   double.E) B) and C)
F) A) and C)

Question 10

Two members of the Kenyan parliament from coffee-growing areas said that no firm should have a monopoly to market Kenyan coffee. The retail coffee company Tetu Coffee has sparked a storm in the industry by promising to earn the country Sh400 billion annually if given exclusive licenses to market Kenyan coffee. The members of parliament said the coffee bean farmers should be free to sell their beans to the highest bidder. Are the farmers in Kenya justified in being upset with having a single coffee buyer?

Accepted Answer

A)   Maybe; the single buyer may reduce quantity but also raise price of coffee beans.
B)   Maybe; the single buyer may reduce price but also will raise the quantity of coffee beans.
C)   No; the single buyer will increase the price and quantity of coffee beans.
D)   Yes; the single buyer will reduce both the quantity and price of coffee beans.E) A) and B)
F) A) and C) D

Question 11

A monopsonist facing many suppliers of labor will employ:

Accepted Answer

A)   fewer workers than a firm operating in a perfectly competitive labor market.
B)   the same number of workers as a firm operating in a perfectly competitive labor market.
C)   more workers than a firm operating in a perfectly competitive labor market.
D)   an indeterminate number of workers.E) All of the above
F) A) and B)

Question 12

Which of the following will shift the labor demand curve to the right?

Accepted Answer

A)   An increase in the price of a competing, substitute input
B)   A reduction in the demand for the output produced by labor
C)   A reduction in the wage rate
D)   An increase in the use of factory automationE) A) and C)
F) B) and D)

Question 13

If the marginal income tax rate falls from 50 percent to 40 percent:

Accepted Answer

A)   the average tax rate rises.
B)   the incentive to work becomes stronger.
C)   the incentive to work becomes weaker.
D)   after-tax wages decline.E) None of the above
F) A) and B)

Question 14

Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Accepted Answer

A)   the relationship between obesity and income is accidental.
B)   obese women earn less because they are less productive.
C)   obese women earn less because employers discriminate against them.
D)   obese women earn less either because they are less productive or because employers discriminate against them.E) A) and D)
F) A) and C)

Question 15

The Chicago City Council considered a "living wage" ordinance that would raise the minimum wage in Chicago to about $10 an hour. How did most economists probably view this legislation?

Accepted Answer

A)   It is a proposal that is meant to help everyone.
B)   The city will benefit because more people will move to Chicago.
C)   All people looking for work will be helped, but consumers will be hurt.
D)   Workers who can find work will be helped, but some people will lose their jobs.E) B) and D)
F) C) and D)

Question 16

Which of the following does Luddite reasoning get correct?

Accepted Answer

A)   Historically, the demand for labor has actually increased as technology has advanced.
B)   Labor is necessary for building and maintaining machines, and so increased demand for machines increases the demand for labor.
C)   New technology tends to raise total output, leading to an increase in the demand for labor.
D)   New technology frequently causes some specialized labor skills to become obsolete.E) A) and B)
F) A) and C)

Question 17

Suppose the government reduces marginal income tax rates and increases welfare payments. This policy combination will:

Accepted Answer

A)   increase the incentive to work.
B)   reduce the incentive to work.
C)   have no effect on the incentive to work.
D)   have an ambiguous effect on the incentive to work.E) All of the above
F) A) and C)

Question 18

A decrease in the wages of truck drivers might be explained by which of the following factors?

Accepted Answer

A)   An increase in the price of gasoline
B)   An increase in competition within the trucking industry
C)   An increase in the demand for transportation
D)   An increase in the cost of air freightE) None of the above
F) A) and C)

Question 19

Discrimination based on characteristics that are related to job performance may be in the economic best interests of a firm.

Accepted Answer

A) True 
 B)False

Question 20

Suppose wages increase but employment decreases. These changes most likely were caused by:

Accepted Answer

A)   an increase in labor demand.
B)   an increase in labor supply.
C)   a decrease in labor demand.
D)   a decrease in labor supply.E) All of the above
F) None of the above

Exam 17: Work and the Labor Market

In the 1700s and 1800s:

Correct Answer
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Entrepreneurship could best be classified as:

Correct Answer
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If a single union supplies all the labor in a competitive labor market, the union probably will:

Correct Answer
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The demand for labor is derived from the demand for output.

Correct Answer
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Institutional discrimination exists when:

Correct Answer
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C

The marginal revenue product of an input tends to decrease as:

Correct Answer
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B

Supply and demand analysis can explain:

Correct Answer
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The elasticity of labor demand does not depend on the:

Correct Answer
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The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would:

Correct Answer
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D

A monopsonist facing many suppliers of labor will employ:

Correct Answer
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Which of the following will shift the labor demand curve to the right?

Correct Answer
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If the marginal income tax rate falls from 50 percent to 40 percent:

Correct Answer
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Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Correct Answer
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The Chicago City Council considered a "living wage" ordinance that would raise the minimum wage in Chicago to about $10 an hour. How did most economists probably view this legislation?

Correct Answer
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Which of the following does Luddite reasoning get correct?

Correct Answer
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Suppose the government reduces marginal income tax rates and increases welfare payments. This policy combination will:

Correct Answer
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A decrease in the wages of truck drivers might be explained by which of the following factors?

Correct Answer
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Discrimination based on characteristics that are related to job performance may be in the economic best interests of a firm.

Correct Answer
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Suppose wages increase but employment decreases. These changes most likely were caused by:

Correct Answer
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Exam 17: Work and the Labor Market

In the 1700s and 1800s:

Correct AnswerverifiedShow Answer

Entrepreneurship could best be classified as:

Correct AnswerverifiedShow Answer

If a single union supplies all the labor in a competitive labor market, the union probably will:

Correct AnswerverifiedShow Answer

The demand for labor is derived from the demand for output.

Correct AnswerverifiedShow Answer

Institutional discrimination exists when:

Correct AnswerverifiedC

The marginal revenue product of an input tends to decrease as:

Correct AnswerverifiedB

Supply and demand analysis can explain:

Correct AnswerverifiedShow Answer

The elasticity of labor demand does not depend on the:

Correct AnswerverifiedShow Answer

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

A monopsonist facing many suppliers of labor will employ:

Correct AnswerverifiedShow Answer

Which of the following will shift the labor demand curve to the right?

Correct AnswerverifiedShow Answer

If the marginal income tax rate falls from 50 percent to 40 percent:

Correct AnswerverifiedShow Answer

Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Correct AnswerverifiedShow Answer

The Chicago City Council considered a "living wage" ordinance that would raise the minimum wage in Chicago to about $10 an hour. How did most economists probably view this legislation?

Correct AnswerverifiedShow Answer

Which of the following does Luddite reasoning get correct?

Correct AnswerverifiedShow Answer

Suppose the government reduces marginal income tax rates and increases welfare payments. This policy combination will:

Correct AnswerverifiedShow Answer

A decrease in the wages of truck drivers might be explained by which of the following factors?

Correct AnswerverifiedShow Answer

Discrimination based on characteristics that are related to job performance may be in the economic best interests of a firm.

Correct AnswerverifiedShow Answer

Suppose wages increase but employment decreases. These changes most likely were caused by:

Correct AnswerverifiedShow Answer

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C

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B

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D

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